News Briefs: Jan. 28, 2013

Jan. 27, 2013 - 05:18PM
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Spending cuts to hit DFAS

The Defense Finance and Accounting Service on Jan. 27 will freeze hiring, stop nominating employees for performance awards, and slash travel, training and overtime to help it deal with budget cuts.

In a Jan. 17 e-mail obtained by Federal Times, DFAS Director Terri McKay said more stringent actions — such as furloughing employees — may be necessary if sequestration takes place or the current continuing resolution expires without another agreement in place to further fund the Defense Department.

“These are challenging times for us all,” McKay said in the e-mail. “I am proud of what you do every day, and I ask for your patience and your continued commitment to our customers.”

DFAS discussed its plans to reduce costs with the American Federation of Government Employees Jan. 16 at a labor-management forum meeting. McKay said in her e-mail that DFAS and AFGE agreed those plans were “reasonable and responsible at this time.”

Ed Abounader, president of AFGE’s DFAS council 171, said that these cutbacks are much more desirable than furloughing employees.

“Furloughs would be devastating to our people,” Abounader said. “Our employees are predominantly lower-graded technicians. An unpaid furlough — even for one day per pay period — would have a far more immediate impact than reduced overtime or no new hires.”

Abounader said that DFAS will probably make exceptions to the hiring freeze and the cuts in overtime for mission-critical operations, such as ensuring service members in combat zones get their pay. He said DFAS did not say exactly how much overtime, training and travel will be reduced. He also said the budget situation is too fluid to know how long those restrictions will stay in place.

The entire federal government is bracing itself for severe budget cutbacks if sequestration takes effect in March. The Army, Navy and Air Force have already frozen hiring and are warning employees that massive furloughs may be required — perhaps for as much as 22 days.

Sequestration would cut roughly 9 percent from Defense’s budget by the end of the fiscal year in September. But even if Congress and President Obama come to a deficit reduction agreement that avoids sequestration, it still will likely contain steep budget cuts.

DoD budget cuts spark $2.1B quarterly loss at GD

General Dynamics lost $2.1 billion in the fourth quarter of 2012, as slowing defense spending took a toll on its information technology business, the contractor reported Wednesday.

For the same period in the previous year, the company reported a $603 million profit.

For the year, General Dynamics, based in Falls Church, Va., lost $302 million compared to a $2.55 billion profit in 2011.

Driving the fourth quarter loss was a $2 billion “goodwill impairment” associated with the impact of “slowed defense spending” on General Dynamics’ information systems and technology group, the release said. Goodwill refers to the value of intangible assets such as a company’s reputation.

The results “reflect the fact that some of our markets are contracting as government budgets shrink at home and abroad,” Phebe Novakovic, the company’s chairman and chief executive officer, said in the release. “They also suggest opportunity for improvement in some areas of our performance, which we are addressing.”

In the information systems group, “I think we’ve seen the trough,” Novakovic said in a conference call with stock analysts. The group has “repositioned,” she said. “Their backlog [of work] is stable.” Novakovic also struck an upbeat note on upcoming “international opportunities” that she declined to elaborate on.

“You should see some of those opportunities drop into our backlog in the first quarter.” Novakovic also discounted the potential effect of across-the-board federal budget cuts — known as sequestration — on the company’s defense business. The reductions, which are set to begin taking effect March 1, would lop 9 percent off of anticipated defense spending this year. But even if there are “pretty significant cuts,” Novakovic said, “we see very little impact.”

GAO to examine OPM’s performance management experiment

Congressional auditors will be inspecting how well the government’s latest effort at performance management is going.

The controversial program —called GEAR — is being tested at five agencies and, if successful, could be expanded to cover many federal employees. GEAR stands for Goals-Engagement-Accountability-Results.

The Office of Personnel Management is championing the program and has said improving performance management through GEAR is a necessary first step toward a longer-term goal of overhauling the GS system.

GEAR was launched in late 2011 and seeks to create a culture of ongoing, continuous feedback between managers and employees. Under the program, managers are supposed to hold quarterly performance reviews with their employees, and agencies are expected to improve how they select supervisors and require mandatory training for them on how to manage their employees’ performance. Some federal unions are skeptical about how effective GEAR will be.

Reps. Darrell Issa, R-Calif., and Blake Farenthold, R-Texas, asked the Government Accountability Office on Jan. 4 to report on the program’s status and how well it is working so far. Specifically, the congressmen asked GAO to focus on what actions the agencies testing GEAR have so far taken; how well those agencies’ implementation plans, goals and timelines line up with best practices for effective performance management systems; and what benefits GEAR will yield.

Issa is House Oversight and Government Reform Committee chairman. Farenthold is chairman of the committee’s federal workforce subcommittee.

GSA names new commissioner for Federal Acquisition Service

Thomas Sharpe, the Treasury Department’s senior procurement executive, has been tapped to be the new commissioner of the General Services Administration’s Federal Acquisition Service.

GSA began looking for a new commissioner in September after former commissioner Steve Kempf took medical leave in July.

FAS was among several GSA agencies that came under fire this year for excessive conference spending. According to the GSA inspector general, FAS spent $268,732 on a Nov. 17, 2010, one-day performance awards ceremony. The event included $20,578 for 4,000 drumsticks for a drum-playing exercise, $28,364 for 4,000 picture frames that included digital displays telling the time and temperature, and $7,697 for a reception that included a guitarist and violinist.

Marie Davie — who was appointed acting FAS commissioner after Kempf left— will return to her role as assistant commissioner of integrated technology services at GSA.

In addition to his work at Treasury, Sharpe also has consulted for IBM Business Consulting Services and held posts at the Environmental Protection Agency and the Defense Department.

Army plans to cut leased vehicle fleet

The Army plans to cut about 10,000 leased vehicles from its fleet — about 14 percent of its non-tactical vehicles — to help offset deep budget cuts scheduled to kick in March 1.

The move could save as much as $60 million — about $6,000 per car — over a year, according to Edward Moscatelli, chief of the transportation branch in the Office of the Assistant Chief of Staff for Installation Management.

The Army has about 74,000 vehicles — 10,800 owned by the Army, 63,000 leased from the General Services Administration and about 1,130 leased from the private sector.

Moscatelli said the Army is working with GSA on ways to reduce its fleet in a swift but responsible manner. Those plans include replacing vehicles with a smaller number of shuttle buses and moving remaining vehicles to installations that need them most.

The March 1 budget cuts — known as sequestration — are required by the 2011 Budget Control Act unless Congress and the Obama administration agree on a path to reducing future budget deficits by $1.2 trillion through 2021.

Moscatelli said the budget savings will fund more urgent priorities, including the Army’s program to assist wounded warriors.

“There are other missions that are pulling at the purse strings that have become mandatory that we need to take care of,” Moscatelli said.

“We need to make sure that everyone within the DoD family understands that when we replace a vehicle from a cost standpoint we may not replace it with a brand new vehicle,” Moscatelli said.

The Army has no plans to reduce the number of vehicles it owns, which are primarily emergency vehicles, specialty equipment or cars purchased in overseas areas where GSA does not operate, he said.The size of the Army’s fleet has already fallen from nearly 83,000 vehicles in 2009, including 70,348 vehicles leased from GSA.

The Army recently announced a series of budget-cutting measures, including a civilian hiring freeze, the termination of some temporary employees and reviewing contracts and studies for possible savings.

GAO faults oversight of IT investments

Many of the government’s information technology investments lack proper oversight and transparency and end up over budget or behind schedule, according to David Powner of the Government Accountability Office.

Initiatives such as data center consolidation risk forfeiting billions in expected savings because agencies lack complete data center inventories and plans to consolidate them, according to Powner’s scheduled testimony before the House Oversight and Government Reform Committee on Tuesday afternoon. The Office of Management and Budget expects data center consolidation will save $3 billion by 2015.

And while OMB has improved oversight, accountability and transparency of IT spending through efforts like the federal IT Dashboard — a website that’s supposed to update the public on the performance of major IT projects — data has often been unreliable or incomplete, according to Powner.

Agencies are expected to spend $74 billion on information technology this fiscal year, with most of that funding — $54 billion — budgeted for operating and maintaining existing investments.

The hearing will look at how the government can reform its IT investment strategy. Many have blamed wasteful IT spending not only on inadequate oversight but on the way IT is funded at the program level rather than departmentwide.

“Information technology is at the heart of every federal agency or program’s ability to function successfully,” Committee Chairman Darrell Issa, R-Calif., said in a statement. “We've built an IT infrastructure that is bloated, inefficient, and actually makes it more difficult for the government to serve its citizens.”

Issa said experts estimate that up to $20 billion in IT funding is wasted annually.

Federal chief information officer Steven VanRoekel is also expected to testify at the hearing. In his written testimony, VanRoekel reiterated several initiatives that CIOs are carrying out, including the Digital Strategy, cloud computing and improving cybersecurity. Through a process called PortfolioStat, where agency officials review their spending in search of duplicative investments and opportunities to consolidate projects, VanRoekel said agencies could save $2.5 billion over three years if PortfolioStat findings are implemented.

“Rather than use the current fiscal situation as an excuse to reduce services, the administration views it as an opportunity to cut inefficiencies and invest in innovation that will drive better service, efficient spending and more vigilant security,” VanRoekel says.

Report calls for more transparency in CFC fees

The federations that have assumed a growing role in the Combined Federal Campaign need to do a better job of disclosing the fees they charge charities, a new report contends.

To recover their overhead costs, federations — nonprofit organizations that perform a variety of services on behalf of CFC charities — often deduct those fees from donors’ pledges before they get to the intended charities.

Although many federations “make a good-faith effort” to explain how fees are calculated, “it can be difficult to compare one price-tag with another,” according to the report, which will be released Tuesday by the Workplace Giving Alliance, a Massachusetts-based organization that includes a dozen national and local CFC federations. The alliance provided an advance copy to Federal Times.

There are dozens of national federations that provide charities administrative and marketing services and help navigate the paperwork needed to join the campaign.

But the federations differ widely in how — and whether — they disclose information on the fees they charge charities for those services. One federation posted no information on its website, while others did so in different formats.

Many set the fees as a percentage of CFC pledges made to a given charity, often between 4 percent and 8 percent. A federation’s percentage cut could be higher if a federation charges a flat minimum fee.

Those federation fees are in addition to the fees charities pay to local CFC campaigns, which amount to 10 percent on average.

“We have suggested to [Office of Personnel Management] that it move more aggressively to require federations to make clear what they will charge their charity members,” the report says.

OPM intends to propose a vast overhaul of the CFC. A draft of those reforms, obtained by Federal Times, calls for holding the CFC campaign a month later in the year, streamlining the CFC’s organization, and switching to only electronic pledges, among other things. The draft reforms also call for more transparency in the fees that federations charge their charities.

Specifically, OPM’s draft proposal would force federations to bill charities for their fees. Currently, federations are given the pledges by feds made to their charities and the federations remove their cut before handing those pledges on to the charities themselves. The current process creates confusion and uncertainty for both charities and feds over how much is pledged to any given charity and how much of that money goes to overhead costs.

The report by the Workplace Giving Alliance endorses that approach. “We believe this change will drive federations toward a much more complete disclosure of the amounts they are withholding from their members since federations will simply have to issue bills,” the report says.

AUSA trade show still on; Army likely halves its attendance

The Association of the United States Army (AUSA) moved quickly this week to reassure the defense industry that its annual winter meeting in Fort Lauderdale, Fla., is still scheduled after its president, retired Gen. Gordon Sullivan, told a breakfast meeting that “as of right now” the annual convention is a go, but “we will let you know if that changes.”

Along with the trade association’s larger meeting each October in Washington, the two AUSA-sponsored events draw thousands of active-duty soldiers, defense industry members and the press.

But the show has seen significant declines in attendance over the past two years due to budget pressures within the Army and in industry.

Soon after Sullivan’s comments, AUSA released a statement saying that the organization is “analyzing the courses of action that we can take to provide value at the Winter Symposium” given its smaller nature, but emphasized that the winter event “is going forward as planned.” The letter concluded by warning, “while Army participation may be reduced, per the Secretary’s guidance, there will be an Army presence at this meeting, according to our current understanding.”

Several sources close to the decision-making process in the Army have confirmed to Defense News that the uniformed presence at the Winter AUSA show will be down sharply from previous years. The service requested travel for 200 uniformed personnel, to include program executive officers and their staffs, but the service will likely only receive travel waivers for about 100 attendees, the sources said.

At the larger meeting in Washington in October, the Army was forced to scale back from a planned 75 booths to just one. While about 5,000 fewer people attended the event, the Army allowed 400 people to use government funds to attend the show.

Defense powerhouses such as BAE Systems, Raytheon, Lockheed Martin, Honeywell, ATK, SAIC, Textron, Rockwell Collins, ITT Exelis and General Dynamics Land Systems have decided not to buy floor space at the event, according to the most recent floor plan for the convention center in Fort Lauderdale. Several of those companies likely will occupy suites above the convention floor for meetings and will continue to sponsor breakfasts and events at the conference, company representatives told Defense News.